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October 13, 2008
WSJ: Obama's Tax Cut for 95% of Americans Is an Illusion
Editorial in today's Wall Street Journal: Obama's 95% Illusion; It Depends on What the Meaning of "Tax Cut" Is:
One of Barack Obama's most potent campaign claims is that he'll cut taxes for no less than 95% of "working families." He's even promising to cut taxes enough that the government's tax share of GDP will be no more than 18.2% -- which is lower than it is today.
It's a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he's also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of "tax cut." ...
Mr. Obama is proposing to create or expand no fewer than seven [tax] credits for individuals:
- A $500 tax credit ($1,000 a couple) to "make work pay" that phases out at income of $75,000 for individuals and $150,000 per couple.
- A $4,000 tax credit for college tuition.
- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
- A "savings" tax credit of 50% up to $1,000.
- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
- A child care credit of 50% up to $6,000 of expenses a year.
- A "clean car" tax credit of up to $7,000 on the purchase of certain vehicles.
Here's the political catch. All but the clean car credit would be "refundable," which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer -- a federal check -- from taxpayers to nontaxpayers. ...
Because Mr. Obama's tax credits are phased out as incomes rise, they impose a huge "marginal" tax rate increase on low-income workers. The marginal tax rate refers to the rate on the next dollar of income earned. As the nearby chart illustrates, the marginal rate for millions of low- and middle-income workers would spike as they earn more income. ...
One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.
October 13, 2008 in Political News | Permalink
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Tracked on Oct 14, 2008 9:44:03 AM
» Tax Cuts: What's not to Love? from amcgltd
So Obama says he's cutting taxes for 95% of Americans. Presumably being one of those 95%, I suddenly find myself feeling "not so fresh" in my support of McCain. Then I find out what the Democrats call a tax... [Read More]
Tracked on Oct 17, 2008 11:49:30 AM
Comments
But marginal tax rates aren't total tax rates. Total tax rates are still going to be south of what they would be. Yeah, if you make more money than you would, you're going to be paying more taxes. That's a given, regardless of who is in office. It's pretty facetious when you complain that an increase is going to take away more money than what you were paying, when without the plan your total tax bill would be higher than the Democrat plan regardless.
Confusing marginal tax rates with total tax rates is much more illusional.
Posted by: Bryan Price | Oct 13, 2008 3:36:24 PM
Bryan is exactly right. The article twists the words to make it appear that its is a tax increase. I believe this strategy was employed a few months back, and it does not hold water.
So, I would like the author to answer this. If I earn the SAME amount next year, will my tax increase or decrease.
Posted by: Disagreeable | Oct 13, 2008 9:27:43 PM
Yeah, Bryan, because marginal tax rates are meaningless, huh. I guess that's why we all studied economics - to not care that increased marginal tax rates create a perverse incentive NOT to work. But I guess that is what Obama wants to reward anyways. Let's not worry about fairness in opportunity - let's only focus on fairness in outcome, and make sure the bum who is too lazy to get an education or at least a job, can get money through "tax credits" i.e. WELFARE.
Obama is a selfish piece of crap standing up for the institutionalized welfare state. And if you cannot see through this crap, you are one of them.
Posted by: Bryan Price is an idiot | Oct 13, 2008 10:23:39 PM
Misleading graph -- flips every tax credit/cut that gets phased out as an "increase in marginal tax rate". What a load of BS...
Posted by: | Oct 13, 2008 10:52:20 PM
Bryan,
It would be nice if you could post something that wasn't complete gibberish.
Posted by: Mike M | Oct 13, 2008 11:06:08 PM
If McCain came out and said that Obama was transferring money from the people that pay tax to the people that don't pay tax, and giving them a free check, all those people who don't pay tax and weren't going to vote WOULD go out and vote.
At least that's my theory on why he's not saying anything. McCain has let a lot of things go unanswered... and I truly fear that'll be his downfall.
And if Obama does get elected, I'm pulling all my money out of the market, because it's going to go straight down as soon as people figure out what he's going to do with a Democrat congress.
Posted by: Dean | Oct 13, 2008 11:09:14 PM
Yo, WSJ...ever hear of accrual accounting? Your man Bush ALREADY raised taxes by trillions, he just doesn't COLLECT taxes. Now you're drawing charts and tossin' up data explaining that a $500 refundable credit isn't really a tax cut? That's BS and you know it.
You're new man McCain plans to double down on the accrual scam and raise taxes even more. No mention of that, of course.
Thankfully, you're radical right BS is about to come to an end. President Obama. 60 Democratic Senators.
Posted by: kitkat | Oct 13, 2008 11:09:35 PM
I think the important point is that you can't give a tax cut to people who arent paying taxes, which is the lie Obama is telling. He is transferring wealth from tax payers to non tax payers (a negative tax, if you will) but selling it as a tax cut somehow. And keep in mind that withholdings are likely to go up and refunds increase under Obama's plan, making especially the lower income earners more beholden to the government on a week to week basis. Its already a huge scam the the government ends up overwithholding significant portions of most Americans income interest free and the returning it in April as though its doing us a favor. All of this enhances the perceived and actual poower of government.
Posted by: Mark Buehner | Oct 13, 2008 11:10:12 PM
"even if you have no tax liability" Any stats about how many of these non-tax payers will be getting checks?
Posted by: steve | Oct 13, 2008 11:14:38 PM
Does the term "Current Law" include or exclude the various Bush Tax Cuts? There's a long list with sunset provisions, IIRC.
Posted by: Alan S. Blue | Oct 13, 2008 11:23:49 PM
So, Bryan, are you arguing that marginal tax rates don't count, or that it is okay to give with one hand and take away with the other while only counting the hand that is giving?
And how about explaining how you can call a give away to non-taxpayers a 'tax cut'? I guess it really is a Humpty-Dumpty world.
Posted by: JorgXMcKie | Oct 13, 2008 11:24:53 PM
Read the last two paragraphs of the linked article if you want to understand why marginal tax rates matter.
Overall, though, so long as we are operating under "From each according to his ability, to each according to his need," Obama's plan makes sense.
Posted by: Bored 3L | Oct 13, 2008 11:30:19 PM
Once again: from a microeconomics standpoint, marginal rates are tremendously important in their effects on personal decision-making. It creates a powerful incentive against the activities and decisions that create economic growth. Precisely at the time when we most need it.
Posted by: Wells | Oct 13, 2008 11:32:07 PM
"confusing marginal tax rates with total tax rates is much more illusional."
True, but the concept of marginal tax rates are much more important. "Total" tax rates are almost meaningless from an economic stand point. Marginal tax rates, however, are as significant as other marginal economic parameters because this is what the actor considers at the point of economic decision making: should I work more, should I invest more, should I save more, should I buy more.
Obama's tax plan is nothing but smoke and mirrors, and is covered up by a complicit media that will not discuss the true ramifications of it: it is not a "tax" reduction but a entitlement program.
Posted by: Mark | Oct 13, 2008 11:33:16 PM
Bryan,
Do you REALLY believe he can lower taxes for 95% of Americans? That the remaining, already most highly taxed Americans, can pay the entire load?
Also, marginal tax rates are important, because they greatly affect incentives.
Posted by: John Moore | Oct 13, 2008 11:44:10 PM
Bryan Price - do you know what you just wrote? Because if you do could you please explain it to me with less use of the word "would"?
Posted by: ReginaldL | Oct 13, 2008 11:48:43 PM
And yet most of your commenters have been more concerned with what color ink Sarah Palin signed her form.
Posted by: rrr | Oct 13, 2008 11:49:55 PM
One mystery -- among many -- of the McCain campaign is why it has allowed Mr. Obama's 95% illusion to go unanswered.
This debate is McCain's last chance to explain things to the American people. After that, it's just the liberal media that's going to be explaining it.\
Senator McCain, stop letting us down!
Posted by: Daryl Herbert | Oct 13, 2008 11:53:21 PM
The point in discussing marginal rates, however, is that increasing them is a disincentive to work more/harder. The chart makes the point very explicitly--for somebody earning $25K per year, the amount that they take home of the next $5K is drastically reduced by Obama's plan.
Posted by: Tom | Oct 14, 2008 12:00:30 AM
I think the correct word for "refundable tax credit" is welfare. I'd say "charity", but that implies the person providing the funds acted voluntarily, rather than under duress.
Posted by: Taxpayer | Oct 14, 2008 12:09:14 AM
And, Obama has promised to cut total spending, by finding waste in a line by line examination of government programs.
People will believe anything, and the press will ignore everything when their hope is excited.
Posted by: Andrew Garland | Oct 14, 2008 12:09:53 AM
I work very hard for what I receive. It isn't all that much, when I consider that I have a family of 4 and am the sole wage earner. If someone (Bryan, are you listening?) can explain to me why it is right for me to pay more, and for someone who doesn't work as hard to receive these tax 'refunds', I am all ears.
Yeah, there are the greedy CEO's, etc..., but some people are 'rich' because they are more talented, work harder, save their money, don't spend beyond their means. Taking from people who accumulated wealth through honest effort is theft - plain and simple.
Posted by: ian | Oct 14, 2008 12:22:17 AM
What happens during his term when present tax law is eliminated with the death of Bush Tax Credits... I see this as part of his Big Lie in that the cavcelation of the tax cuts will hit almost every American, but he will claim its not something he passed... Once Again we'll have to parse every statement from a political lawyer... McCain could show how the tax cut elimination is a huge tax increase..during an Obama administration... Thanks
Posted by: AndyJ | Oct 14, 2008 12:25:45 AM
God God that's all we need is government making even MORE of a financial distortion in coercing people who don't need houses to try to buy them anyway. I can't imagine anything bad coming of THAT.
Posted by: Kevin | Oct 14, 2008 12:42:26 AM
What Obama is proposing is that only the plantation owners have to pay taxes. Just like was done in the ante bellum South.
Posted by: Dave | Oct 14, 2008 12:50:32 AM
Bryan Price,
I'm curious to understand the basis of your claim that total tax rates will be lower.
Marginal tax rates (MTRs) are the derivative of total tax rates (TTR) - basically, the change in TTR divided by the change in income. To derive TTR from MTR, you need to integrate the MTR. This is done graphically by measuring the area under the curve of the MTR.
It appears to me from the WSJ graph that the MTR under Obama's plan is higher than the current MTR at every income level between $25,000 and $125,000. This means that the area under the Obama MTR curve is higher than the current MTR, therefore in this income range the TTR is higher.
Moreover, if you look at the income range between $25,000 and $50,000, it looks like the Obama plan has a TTR that is about 75% higher than the current law. This would mean that to have equal TTR at $50,000, the Obama plan would have to be much lower than current law below $25,000, which seems implausible given the earned-income tax credit and the fact that most of these folks already have pay no income tax.
In short, the graph presented here (admittedly, just a single example) does not support your claim about TTR. But at least this graphic is based on analysis. If you have evidence or analysis that supports your claim, it would be good of you to share it. Otherwise, your claim is unconvincing.
BTW - I don't have a political axe to grind here; I'm just interested in knowing the effects of Obama's plan.
L3
Posted by: Leo Linbeck III | Oct 14, 2008 12:51:22 AM
What Obama is proposing are not tax cuts but a new set of entitlements which will be comparable to the bailouts in size. The difference is that the bailouts are supposedly a one time occurrence while these new entitlements will be a continuing drain on the economy.
Now is not a time for new entitlements because the existing Social Security entitlements are heading towards a demographic collapse in the next decade as benefit payments start to exceed FICA "premiums." The decades old policy of spending excess FICA taxes will shortly turn around and we will be forced to spend general revenues to meet current Social Security benefits.
Our best hope is to grow the economy but that will be less likely under an Obama "spread the wealth around" tax policy.
Posted by: Laurence | Oct 14, 2008 12:55:10 AM
> Total tax rates are still going to be south of what they would be
Nope, not if the chart is right. Total tax rates are just the definite integral of the marginal tax rate -- and for the total-tax under Obama to be less than it is now at any income level, the marginal-tax has to be less than it is now at some point to the left of that level and if you look at the chart, you see that that never happens.
Posted by: Malvolio | Oct 14, 2008 12:59:53 AM
"without the plan your total tax bill would be higher than the Democrat plan regardless."
Taxprof's post is (under Obama's tax plan) regarding people who already pay no tax getting a handout while people who already pay most of the tax paying a whole lot more (200-300%+ more) than under McCain's tax plan. This socialistic re-distribution of wealth info brought to you by someone who thinks it's a great idea:
http://www.youtube.com/watch?v=cNyNv_UfFUo
Posted by: David | Oct 14, 2008 1:47:27 AM
No Bryan that is incorrect the illusion is that he is giving tax cuts when in reality he is giving welfare checks to those that do not pay taxes unless they just don't file their income tax returns at all.
Let's not confuse tax cuts for all on the McCain side with redistribution of income while letting the current Bush tax cuts expire for the rest with a promise of more cuts that are not as good as they currently are under Bush. You do realize that the middle class are paying less in income tax now than they have ever before historically speaking? Guess not.
We don't have a perfect system of Govt but it is the best in the world by far and capitalism does work we have just forgotten we are a Republic and are not running our Govt but instead are letting the supposed representatives run us and become wealthy off of special interests and large corps. Our task is easy, vote out the socialists and Marxists and the professional politicians and vote in honest everyday people starting at the local levels and keep them honest or throw them out too. McCain isn't my favorite but he and Palin are the only choice now for freedom and to keep our Constitution in tact for the future.
Everyone needs to get a grip and look at the facts. Obama is a hardcore leftist, socialist, liar and a racist to boot while McCain isn't perfect he is honorable and honest and does at least fight against corruption when he finds it.
Vote for honesty and our Republic not lies and socialism...
Posted by: Carlos F. | Oct 14, 2008 2:44:05 AM
It is absolutely true that marginal tax rates are not total taxes. The tax break definitely creates a one time shift in the net transfer arrangement. But the point of the marginal tax rate analysis is to understand the incentives affecting decisions after the tax change. As you can see from the graph there is a huge disincentive for the poor for whom this this tax cut was rationalized to earn more money. If the goal is to ensure that the underclass (read democrat voters) remains large and even attracts new members then this tax plan is ideal.
The democrats love the poor so much they wish everyone was poor. The republicans hate poverty so much they wish everyone was rich. Michelle is probably saying, "let them eat twinkies."
Posted by: car | Oct 14, 2008 4:28:12 AM
If Obama is elected the only solution will be revolution.
Posted by: Patriot | Oct 14, 2008 4:57:55 AM
Obama's math just won't work. No way can he squeeze out of 5% of the people, enough money to give some back to all the other 95% AND spend spend spend on bigger government programs. Nor will that 5% sit still; because with this steepening of marginal rates, they will stop working, run away or otherwise act the way rational actors do when punished for taking risk and breaking a sweat. Obama seems not to know or care about human nature, economics, simple math, or history. It would be instructive if he or his advisers were to spend even an hour reading Amity Shlaes' excellent history of the Great Depression, "The Forgotten Man." FDR grew frustrated with the tax revenue shortfalls that arose after he jacked income tax marginal rates to about 70%. So he constructed taxes on "undistributed profits" which (IIRC) were taxes on after-tax income of corporations retained rather than dividended-out to owners (which would have triggered a second tax in their hands). This was FDR hunting the wealthy down, driving them from the economy. What is scary about the book is that it is quite clear we were well on the road to socialism under FDR, and he was quite prepared to break word and law and Constitution to take us there. It can happen again. And The One will gladly lead us.
Posted by: 0Man | Oct 14, 2008 7:02:27 AM
Are people really using calculus to talk about tax rates, as if they were a continuous function? Really?
And as for the importance of marginal tax rates, it's true that according to microeconomic theory, they are very important. Unfortunatly, as is the case of so much microeconomic theory, 25+ years of cutting marginal tax rates has added up to zilch in the way of actual empirical proof. From the 40s to the 80s we had top marginal tax rates between 70 and 90 percent, and average economic growth in excess of 4% a year. Since Reagan cut the rates, we have been lucky to break 2.5% in the good years - and of course, have had lower overall rates of investment, which was what cutting the rates was supposed to do.
Some of the non-neoclassical economists who have been exiled from the profession in that time have pointed out that high marginal rates combined with capital gains taxes only incurred upon realization encourages individuals to leave their money in corporations. And since virtually all productive investment (as opposed to "investing" in Mcmansions) is done by corporations, that led to greater investment and higher productivity gains.
But of course, we've reached a point in this country where you don't even hear any justification in terms of public purpose for cutting taxes - what you hear instead is the adult equivalent of a toddler screaming "Mine! Mine!"
Posted by: Jimbo | Oct 14, 2008 7:41:04 AM
The Tax Policy Center has already shown the 95% claim to be a fiction. Every quintile of the income distribution -- even the lowest -- has at least 7% of its members paying higher taxes under Obama's plan.
http://www.taxpolicycenter.org/publications/url.cfm?ID=411749
His claim that "if you like your health care coverage you can keep it" is also hogwash. You can keep it if your employer elects to continue coverage. But since Obama's hiding the ball with the "pay" rate in his "play or pay" system no one really knows what the pickup rate will be with the "public option." Tens of millions of people could be moved into the "public option" due to decisions made by their employers. See Lewin Group's analysis of Edwards' HCA plan for analysis with a stated "pay" rate in the middle of the range.
Posted by: DrSteve | Oct 14, 2008 8:31:08 AM
Not too mention that if you raise the taxes on the rich, they will use Tax attorneys and money managers to figure out a way to actually pay less than they do now.
It is human nature and it has already been ruled on by the Supreme Court that it ever mans right to pay as little taxes as possible.
So when he adds in the new programs, and tax revenues go down. He either borrows on the future, our children, or he raises taxes on the middle class who do not have the extra income needed to take advantage of the Tax attorneys.
Simple really.
An even dumber idea is raising taxes on businesses, which will then be passed on to the consumer, again raising taxes on the lower and middle class.
Take all the democrats in Washington, add their brains together and you would not have enough economic sense to figure out a 20% tip.
Posted by: James Stephenson | Oct 14, 2008 8:49:57 AM
To Jimbo and others who claim that people don't use partial derivatives to make their economic decisions:
A good pool player doesn't have to work kinematics equations, or even know them, to make good use of those laws. And if we want to predict the shot he'll make, WE should be using those equations, because they'll be a strong indicator of what he'll do.
Both liberal and conservative approaches to macroeconomics are still not where they need to be. But the foundations of MICROeconomics (such as the demand curves and constrained optimization under a budget line) are extremely well supported. There are decades of empirical support for these models.
Trying to repudiate the laws of economics just to make Barack Obama's tax plan look good is intellectually dishonest-- and isn't going to work anyway. And it isn't going to lessen the economic damage it causes if it is passed.
We just learned a bitter lesson in adverse risk from the mortgage scandal. You can deny the laws of economics, but you can't suspend them. Spin and propaganda will only keep people from learning a valuable lesson.
Posted by: Wells | Oct 14, 2008 9:23:56 AM
Also, it's hardly true that people who don't pay federal income tax are "non-taxpayers". They pay sales taxes, FICA, gas taxes, etc. This is a common scam of the right: act as though income taxes are the only taxes there are and then complain about how unfair it is for rich people to shoulder this huge tax burden....
Posted by: Ted | Oct 14, 2008 9:27:27 AM
I won't pretend to understand the economic terminology, but I understand the consequences for individuals and their families. Years ago I worked with a woman who had a fairly low paying, entry level job. She was offered a better paying position, but didn't feel she could afford to take it because it would disqualify her for many of the benefits that she needed to get by with the kids, and the salary increase would not be enough to offset the loss.
Neither one of us knew enough about economics to talk about marginal tax rates, but with a high school diploma she could figure out that the system effectively trapped her in a low wage job.
Posted by: JeanE | Oct 14, 2008 9:51:24 AM
The confusion here strikes me as mainly semantic; the WSJ reasoning is quite simple. Instead of using terms like "welfare payment," "refundable tax credit," etc., just think in terms of total income. Under the Obama plan, all these tax credits amount to an additional salary from the government. As your other sources of income grow, your government salary is decreased. The amount it is decreased functions identically to a tax increase, with the exception that the government is keeping your money from the start. In other words, for every amount x your other-than-governmental sources of income increase, your government paycheck decreases by a % of x. That % is your defacto tax rate, regardless of vocabulary.
As far as the effect of marginal tax rates on productivity, anyone who believes there impact is non-existent or, uh, marginal, is simply not qualified to participate in the conversation. It doesn't mean that opinions on their effect cannot credibly differ, or the worthwhileness of the trade-off, or many other things, but to deny or minimize the impact of marginal tax rates is a fantasy of one or another sort.
Posted by: Joe Y | Oct 14, 2008 10:16:27 AM
kitkat - yep toss out 'accrual accounting' as if you know what you're talking about. And somehow Bush isn't COLLECTING taxes? Gee, I wish someone had told ME that - we don't really have to pay, I guess. That really worked well for Wesley Snipes and HIS accountant.
Get a grip. Marginal rates are important, and people DO pay attention to them. People will always watch out for their own pocketbooks (Not everyone, but plenty - enough to make marginal rates a Very Important behavioral motivator).
And your 60 senators/White House is a threat to the Wall Street Journal because ... why? Or is the plan to shut down the WSJ editorial page AND Rush Limbaugh? I see. It becomes very clear who the fascists are....
Posted by: CPA1 | Oct 14, 2008 10:16:34 AM
I would like to see a 90% tax on the richest people. If Obama does not become president, there will be a revolution. All these CEOs with 100M salaries will hopefully go away to Bahamas or some banana republic.
McCains campaign knows that the people can no longer be fooled with the right wing rhetoric any longer. People can see whats happening to the schools, the roads and infrastructure when the rich people do not want to pay for anything. FICA goes up every year, gas prices are high, with most of it going to the oil companies, not to the gas tax. RIch people are getting credits on their hummers and their 10ton SUVs. Posters here, if they are in the working class, are the fools.
Posted by: Disagreeable | Oct 14, 2008 10:25:17 AM
"Total tax rates are still going to be south of what they would be."
What? No they aren't. Total tax rates are going to be higher, not lower. Rates for the rich are going up.
"They pay sales taxes, FICA, gas taxes, etc"
Those generally aren't federal taxes, and not all localities even have those. It's entirely possible to pay no net tax at all.
Also, FICA is not even supposed to be a "tax" but rather a mandatory savings plan. It's only because Democrats designed it as an unsustainable Ponzi scheme 50 years ago that people are now forced to give a large percentage of their income to support an idle class far larger than originally envisioned.
Posted by: TallDave | Oct 14, 2008 10:51:30 AM
Ted,
Once again, there is a certain segment that does indeed pay those taxes. The working poor actually pay NO PAYROLL TAXES because they get it back via EITC. On top of that, they get to retain the credits for the payroll tax payments upon eligibility, thus they get credit for something that they didn't pay.
When the context is the income tax, then it's okay to say that some are "non-taxpayers". I'm quite sure that someone who bought a bottle of wine in some state paid some alcohol tax & so they'd really be 'taxpayers', but that's an aside and, frankly, an attempt at muddying the water.
It's not a one-to-one ratio and I'm not claiming that, but chances are that a good chunk of the ~45% who pay no federal income taxes are eligible for the EITC, thus they pay no FICA (since they get it back....talk about scams).
I really wish people would stop trying to use that argument (not that you did, since you didn't single out the working poor). Pet peeve....
Posted by: RW | Oct 14, 2008 10:56:11 AM
Ted, but Obama is not talking about a "tax cut" for sales taxes, Social Security taxes, or gas taxes, for 95% of the families, is he?
McCain is the one talking about cutting the gas taxes, so you must be a big supporter of him, right?
The question remains, how can you have a "tax cut" in the income taxes for millions of people who already pay zero or negative income taxes.
If he was talking about a "tax cut" for combined-income-and-payroll taxes by reducing both, then we wouldn't be complaining about the tax cuts going to non-taxpayers. But that is not what he is advocating.
Posted by: | Oct 14, 2008 10:57:22 AM
Wells is partially correct except for one fact: all those additional "taxes", sales tax, FICA, gas taxes, etc. are paid with AFTER TAX DOLLARS. Dollars that have already been TAXED at the FEDERAL level. So you're just blowin' smoke when you call it a scam.
Posted by: Ferd Berfel | Oct 14, 2008 11:02:03 AM
As an economist I can tell you this article is based on falsity and is very misleading.
Posted by: JamesC | Oct 14, 2008 11:54:10 AM
1. If it sounds too good to be true, it is.
2. If it can't go on forever, it won't.
You're very entertaining lefties, but the show will close after 2 years. Enjoy your ride.
Posted by: Trouble | Oct 14, 2008 12:26:33 PM
Ted the topic is Federal Income Taxes. Sales taxes are a State matter. FICA is according to the socialists an insurance annuity. Also don't forget as an employee you only pay half of it. Your employer pays the other half. So for the top 5% especially the ones whose revenue is almost all ordinary income not only do they pay nearly all of the income taxes but also get jammed with a disproportionate amount of FICA taxes as well, far in excess of what ever benefit they will ever collect. And that is only on the employee side for the top 5%. The scam is even worse if you are self employed and pay both as employee and employer or as a business owner paying for your employer contribution for your employees. Gas taxes are use taxes to maintain the roads you use. Those who pay the bulk of the income taxes rarely get the benefits of the bulk of government spending.
As for Bryan's comments about marginal rates, spoken like someone who has never paid any substantial amount in taxes.Probably one of the democrat parasites. When your next dollar is taxed at a much higher rate unless you can earn substantially more money to offset the effort of earning the money the next marginal dollar will cost you, it is just easier to not earn the the extra money. Doctors, lawyers and other professionals will simply take longer vacations or more days off. Depending on the size and nature of the business, small business owners will do the same.
There are net taxpayers and net tax consumers. It is time to limit the vote to net taxpayers (for the House of Representatives). When the tax burden gets too high on the those who are net payers, the tax evasion will be massive beyond belief. The super rich will simply take their money out of the country. Just like the Kennedy's.
Posted by: cubanbob | Oct 14, 2008 12:41:18 PM
As an economist I can tell you this article is based on facts and is very legitimate.
Posted by: CsemaJ | Oct 14, 2008 2:18:15 PM
